California has invested billions in improving its mental health system under Governor Gavin Newsom, expanding services and support for individuals in need. However, proposed federal spending cuts threaten these advancements, particularly targeting Medicaid, which covers nearly 15 million Californians. Medicaid, known as Medi-Cal in California, facilitates access to vital behavioral health services, including therapy, psychiatric evaluations, and crisis support. Currently, about 40% of Californians rely on Medicaid for their healthcare needs.
The federal spending cuts, part of a budget resolution passed by the House, could reduce Medicaid funding by $880 billion over the next decade. This reduction could jeopardize numerous state and local mental health programs that depend on Medicaid financing. Experts warn that diminished funding would lead to more individuals going without necessary treatment, which could result in worse outcomes for those struggling with mental health issues.
Alex Briscoe, a principal at the Public Works Alliance and former head of Alameda County Health Care Services, stated, “When you remove resources of this size and scope, everything is at risk. It’s an extremely difficult time to see such fundamental threats to Medicaid funding.” Currently, approximately 50% of adults in California report experiencing symptoms of anxiety or depression, and nearly 1.2 million live with serious mental health disorders.
California’s efforts to revamp its mental health system include increasing treatment beds, expanding crisis hotlines, and improving access to mental health services in schools. These initiatives aim to address the growing mental health crisis, which has been exacerbated by rising opioid-related deaths, particularly due to fentanyl. In 2023, opioid overdose deaths peaked at over 8,000.
Despite the state’s commitment to mental health care, funding cuts could severely impact services. Health Secretary Kim Johnson emphasized the importance of behavioral health care for individuals and communities, stating, “Investing in behavioral health services saves lives and strengthens our workforce and economy.” However, local officials and mental health advocates warn that cuts to Medicaid would lead to increased unemployment and school dropouts, resulting in a greater need for acute care and potentially more individuals experiencing homelessness.
In March 2025, California’s Department of Health Care Services reported losing $120 million in behavioral health grants from the federal Substance Abuse Mental Health Services Administration, which were designated for initiatives aimed at reducing overdose deaths and expanding access to treatment. As Medicaid funding is crucial for numerous support services, including housing assistance and food programs, cuts could hinder progress in stabilizing individuals undergoing mental health treatment.
Federal Medicaid funding accounts for a significant portion of county budgets for mental health services. In Los Angeles County, for example, Medicaid funds contribute 30% of the annual budget for behavioral health services. If federal funding is reduced, counties may struggle to maintain essential services.
California relies on federal waivers to use Medicaid dollars for non-traditional services that support behavioral health care. These waivers allow for funding flexibility for programs that provide care coordination, rental assistance, and other supportive services. The future of these waivers is uncertain, as federal authorities may decide not to renew them or impose stricter regulations.
Experts express concern that proposed cuts to Medicaid could result in losses of $10 billion to $20 billion annually for California. Such losses would significantly impact programs that provide mental health treatment to vulnerable populations, including those with psychosis, which affects many adults.
Counties across California are already maximizing local spending to support mental health services. However, without federal funding, they may face increased pressure on their budgets, making it challenging to sustain initiatives designed to help individuals in need.
In summary, California’s ambitious mental health initiatives could face severe setbacks if proposed federal funding cuts to Medicaid are implemented. With millions relying on these essential services, it is critical to monitor the developments in federal budget discussions to ensure continued support for mental health care in the state.
